Professional Services CRM

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By Chuck

CRM In Professional Services Faces Unique Challenges and Opportunities

Customer Relationship Management software deployments naturally vary from one industry to another befitting the unique objectives, functional requirements and business processes of each. Software customizations run the gamut from slight tweaks to forklift changes and can be easy or hard depending on the nature of the CRM system and the organizational ability of the company deploying it. Even so, some industries struggle harder than most. Case in point: the professional services industry.

"The first issue is that professional services groups do not tend to think they need external help selecting, nor implementing a CRM system," observes Mitchell Lieberman, president and CEO of Comity Technology Advisors. "This is straight from the top, which breaks the first cardinal rule of CRM implementation - lack of executive sponsorship."

CRM software selections are put at risk, and sometimes challenged, when bypassing expert help. Additionally, nearly every type of business software deployment fails without top-end buy-in – no matter how good the CRM system is. It is fairly common then to hear complaints of CRM failure throughout the industry. But this obstacle, as big as it is, is not the only one that stands ready to thwart deployment.

"The second major issue is that services firms believe that project management should be a part of the CRM application," explains Lieberman. "For some firms this is an absolute requirement and adds complexity to the deployment. As there are excellent systems for project management, in my opinion, project management should be separate from CRM." Unfortunately, even among the fastest growing and top CRM systems such as Salesforce.com, Microsoft Dynamics, Oracle OnDemand, RightNow and NetSuite, none include a core module for project management.

"Third, professional service firms need to be constantly reminded to actively use the customer management system, as they rarely use the application for actually managing a relationship," he added. "The system becomes a repository for documents and issues but rarely are email communications -- which should be stored within the SFA system or customer service module -- actually put into the system. The sales person needs to call people and send external emails to the team to get a sense of what is going on with the client, thus, what is SFA for in this case?"

There are, of course, exceptions to this in such a diverse sector. BakerCorp, an equipment rental company, for example, sees customer relationship management software and strategy as absolutely essential to its business. "In our space, we come across companies on a daily basis with very specific, short term needs where renting a piece of equipment makes much more sense than purchasing one," explains Chris Macabuhay, senior marketing associate of BakerCorp. "For us, these industries can range anywhere from oil and gas refineries to bakeries and alcohol distilleries." Without customer relationship management software automation, he says, it would be nearly impossible to keep track – and ahead – of so many different types of customers.

"The challenge for us is to figure out a cost-effective way to market to both short-term infrequent customers in a wide range of industries -- without breaking the bank -- as well as to long-term performing customers in a more narrow field of industries," he added. "BakerCorp needed a CRM program to capture that data and analyze it in order to develop active marketing communication channels for the long tail."

Macabuhay says part of BakerCorp's segmentation strategy "is determining which customers fall into which categories and develop a marketing communication strategy that minimizes our marketing expenditures and maximizes our campaign return on investment."

Professional service companies that are already comfortable with using sophisticated software technologies generally are more open to – and successful at -- deploying CRM software systems.

Xtivia, a technical services company that installs and builds IT solutions, is one example. "As a professional services company we definitely understand the importance of CRM," says Nir Gryn, vice president of Business Development at Xtivia. "Frankly my company and many others have used many flavors and products out there."

"But I have come to one real conclusion, SAAS (Software as a service) is the way to go," he says. "NO installation, maintenance, upgrades, downtime, clunky screens and applications on the desktop." Such a statement from a services company so highly skilled in working with many technology platforms would seem to indicate that while tech-savvy companies are quicker to adopt CRM, the appeal of SaaS CRM products is as strong with this group as it is with less tech-savvy firms.

A preference for SaaS CRM systems hasn't been missed among the vendor community. NetSuite, with its acquisition of OpenAir, Intacct with its Clarizen partnership, Salesforce.com with a few different AppExchange partners and Microsoft Dynamics CRM with its partner channel all aggressively market CRM systems designed for the professional services industry.

Overall, CRM software use in the professional services sector is still far from pervasive. John Ragsdale, vice president of Technology Research at the Technology Services Industry Association (TSIA), recently completed a survey of nearly 200 professional services organizations. Only 55% of professional services teams reported using an enterprise customer relationship management product, while 29% reported they have budget for new or additional CRM tools over 2010-2011 period. Of the professional services teams currently using CRM, Salesforce.com is the most installed application, followed closely by Oracle/Siebel and SAP.

"Note that while only 55% of professional services groups are currently using customer relationship management systems, 62% have a Professional Services Automation (PSA) solution installed, with a movement toward integrating PSA to CRM and ERP to streamline billing, reporting, and utilization tracking," says Ragsdale. "Vendors selling both PSA and CRM (Oracle, SAP, NetSuite) have a clear advantage for companies interested in an 'end to end' services resource planning solution."

That depends upon the particular vendors you review, however, at a fundamental level, CRM software systems are built upon the primary tenants of sales force automation (SFA), marketing automation and customer service. Professional Services Automation (PSA) software systems generally focus on services delivery business processes such as project profiles (with assigned resources, dates, estimates, budgets, milestones, etc.), resourcing and scheduling (by skills and other constraint based parameters), contract types (such as time & materials, fixed fee or cost plus), time and expense collection (with various review and approval mechanisms), automated invoice production, project accounting and project reporting (such as resource utilization, percent complete, work in progress, etc.) Several also offer a Project Management Office (PMO) type module or function to aid project team collaboration and document sharing during project delivery. Such modules may include project team contact lists and centralized project activities, issues, resources, documents and schedules.

anonymous

Why are professional services firms adopting cloud, software as a service systems?

Chuck Schaeffer

In large part for the same reasons as other industries - smaller up front investment, competitive total cost of ownership (TCO) over the life of the customer relationship management system, faster implementation, elimination from perpetual upgrade projects, outsource a non-core competency, access from any device or location, on-demand scalability, etc. While every company has their own reasons, its clear SaaS CRM is accelerating in the professional services industry.

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I have come to one real conclusion, SAAS (Software as a service) is the way to go. NO installation, maintenance, upgrades, downtime, clunky screens and applications on the desktop."